Rhedrick v. Option One Mortgage Corp.

Five years after the underlying litigation in this matter was remanded to state court, Raul Jauregui, Esq., counsel for Plaintiff Tiana Rhedrick, has moved to seal the Court’s September 17, 2009 Memorandum and Order in this case. Mr. Jauregui, joined by his sister Tannia Jauregui, Esq., (collectively “the Jaureguis”), argues that the Court’s September 17, 2009 Memorandum and Order function as a de facto sanction of both Mr. and Ms. Jauregui that should be removed from the public record. Because the Court concludes that neither Mr. nor Ms. Jauregui were sanctioned in this case and that the Jaureguis have not shown good cause for sealing these dispositive documents from the public record, their motion will be denied.

II. Factual and Procedural History

The underlying dispute that gave rise to this case was remanded to state court on September 17, 2009 because of a lack of complete diversity (ECF 33, 34).[1] At the same time, the Court addressed Defendant Option One Mortgage Corporation’s motion for sanctions (ECF 18) and motion to disqualify Mr. Jauregui as counsel (ECF 22). After discussing briefly the issues raised in those motions, the Court “decided to send a copy of [its] Memorandum and Order to the Disciplinary Board of the Supreme Court of Pennsylvania” on the belief “that the Disciplinary Board should be able to conduct a more appropriate investigation.” Memo. at 7-8 n.12 (ECF 33). The Court explicitly “d[id] not make any specific findings or holdings on the topic” of these ethical issues. Memo. at 7-8 n.12 (ECF 33). The Court’s Memorandum and Order have been republished on Westlaw and LexisNexis. Rhedrick v. Option One Mortgage Corp., No. 09-cv-1729, 2009 WL 2996475, 2009 U.S. Dist. LEXIS 84970 (E.D. Pa. Sept. 16, 2009).

On October 3, 2014, more than five years after the case was remanded to state court, the Jaureguis submitted to chambers a Motion to File Under Seal (ECF 42) and a Motion for Sealing the Record (ECF 43), which sought to seal the Court’s September 17, 2009 Memorandum and Order (ECF 33 and 34). On October 9, 2014, the Court ordered the Jaureguis to file a supplemental memorandum of law demonstrating that the Court has jurisdiction to consider the motions (ECF 36). On October 28, 2014, the Jaureguis filed a supplemental memorandum of law on the jurisdictional issue (ECF 37) and on October 30, 2014 the Court entered an order sealing the supplemental memorandum of law (ECF 38). On March 4, 2015, the Court ordered the Jaureguis to submit additional documentation to chambers (ECF 39), and on June 15, 2015, the Court entered an order to file on the docket the Motion to File Under Seal and the Motion for Sealing the Record (ECF 41).

III. The Jaureguis’ Contentions

The Jaureguis argue that the Court’s public referral to the Disciplinary Board serves as a de facto sanction that harms their professional reputations, despite the lack of any public sanction from the Disciplinary Board. In their memorandum of law and in accompanying affidavits, they contend that the referral has hindered their ability to obtain clients and employment. Mr. Jauregui also contends that opposing counsel in other matters have cited the language from the Court’s Memorandum in support of unrelated motions for sanctions. Procedurally, the Jaureguis protest that they did not receive an adequate opportunity to respond or object to the referral. Factually, they argue that the issues identified in Option One’s briefing and the Court’s Memorandum were illusory, and that Ms. Jauregui is an innocent third-party who never entered an appearance in this case. The Jaureguis’ motion requests that the Court seal its September 2009 Memorandum and Order (ECF 33 and 34), take down the PDF version of the Memorandum and Order published on the Court’s public website, and seal all documents related to the present motions.

IV. Jurisdiction

The Court first considers whether it has jurisdiction to grant the Jaureguis the relief they seek. The Jaureguis have not cited, and the Court has not located, any case directly addressing a district court’s jurisdiction to seal public court records long after the underlying suit was dismissed for lack of subject matter jurisdiction. Instead, the Jaureguis argue that the Court has jurisdiction based on its inherent authority, its jurisdiction to consider collateral issues, and as a logical corollary to its jurisdiction to impose sanctions after remand to state court.

In Willy v. Coastal Corp., the Supreme Court held that a district court may impose Rule 11 sanctions after remanding a case to state court. 503 U.S. 131, 132 (1992). The Supreme Court noted that “it is well established that a federal court may consider collateral issues after an action is no longer pending. An imposition of a Rule 11 sanction is not a judgment on the merits of an action. Rather, it requires the determination of a collateral issue: whether the attorney has abused the judicial process, and, if so, what sanction would be appropriate.” Id. at 138 (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395-96 (1990)) (internal quotation marks and alterations omitted). Imposing sanctions after remanding a case to state court “does not raise the issue of a district court adjudicating the merits of a ‘case or controversy’ over which it lacks jurisdiction” because the sanctions order “‘does not signify a district court’s assessment of the legal merits of the complaint.’” Id. (quoting Cooter & Gell, 496 U.S. at 396). Accordingly, “there is no constitutional infirmity under Article III in requiring those practicing before the courts to conduct themselves in compliance with the applicable procedural rules” during the period that a federal court is mistakenly believed to have subject matter jurisdiction, and there is no constitutional problem with “allow[ing] the courts to impose Rule 11 sanctions in the event of [litigants’] failure to do so.” Id. at 139.

The Third Circuit has similarly recognized that “a court does have inherent authority both over its docket and over the persons appearing before it” and “there is abundant authority permitting the imposition of sanctions in the absence of jurisdiction over a case.” In re Orthopedic “Bone Screw” Products Liability Litigation, 132 F.3d 152, 156 (3d Cir. 1997).[2] The Third Circuit concluded that even when a court lacks subject matter jurisdiction, it may still “exercise its authority over the person before the court in the interest of enforcing compliance with the court’s procedures.” Id. at 156-57.

The Court may have jurisdiction to seal portions of the record to the extent that action addresses a collateral issue related to the Court’s inherent power to manage its docket and the persons appearing before it. In addition, construing the Jaureguis’ motion as a motion to modify a sanction, the Court may have jurisdiction to grant relief in the form of a modified sanction. However, if the Court’s jurisdiction hinges on the imposition or modification of a sanction, the Court’s conclusion, discussed below, that the Jaureguis were not sanctioned in this case negates this possible jurisdictional basis.

As discussed below, the Jaureguis have not shown a right to the relief they seek. Accordingly, the question of whether the Court has jurisdiction to grant relief is ...

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